Estia shares hit as results and guidance disappoint

Aged care firm Estia’s shares have plunged 12pc after full-year numbers and 2017 guidance failed expectations.

Estia CEO Paul Gregersen.

Estia Health shares have plunged 12 per cent after the group’s full-year numbers and full-year 2017 guidance fell short of expectations.

The aged care provider (EHE) said its underlying profit rose 16 per cent to $51.8 million for the year to June 30 on the back of a 50 per cent surge in revenue to $446.5m.

The group’s underlying earnings before interest, tax, depreciation and amortisation (EBITDA) rose 31 per cent to $92.7m, but fell shy of the group’s stated target.

The underlying EBITDA number was 2.4 per cent below guidance offered in February, while underlying profit was 7.5 per cent weaker than forecast as the group faced higher than expected financing and depreciation costs.

The news led traders to shun the group’s shares in early deals, with the group trading down 12 per cent at $4.33 at 10.35am (AEST).

At one stage Estia plummeted as much as 18 per cent to a record low, with the intraday drop its worst since listing in December 2014.

“Clearly we’re disappointed not to have reached our targets, but 31 per cent growth in earnings for the full year — with a noticeable step change in performance during the second half — demonstrates the successful delivery of our growth strategy,” chief executive Paul Gregersen said.

“This included a positive contribution from acquisitions.”

The group also announced a change in management, with its chief strategy officer Steven Boggiano to usurp the interim finance chief position from Joe Genova, who will move to the role of commercial director.

Estia said it anticipated underlying EBITDA will rise at least 13 per cent in FY2017, although the implied number of $104.8m is well shy of analyst projections for $119.4m.

“Looking ahead, the company’s performance will be impacted by various factors, principally government changes to ACFI (aged care funding instrument) and consumer preference for accommodation payments,” Mr Gregersen said.

“We are initiating a number of actions to rebalance the impact of these changes both in introducing co-contribution revenue streams and reducing costs.”

Estia declared a final dividend of 12.8c a share.